A US federal appeals court backed Argentina's appeal Wednesday against a lower court's decision to expand the class of euro-denominated bond holders seeking repayment from the country.
In the case of Henry Brecher vs Argentina, the New York court rejected the rationale given by lower court judge Thomas Griesa that all holders of the defaulted bonds, and not just those who joined the original action, should be considered for damages.
The decision of Griesa, who has consistently supported creditor suits against Argentina over its defaulted bonds, would have allowed those who purchased Argentina eurobonds in the secondary market after the original class action suit was filed to be accepted into the class.
The higher court ruled that the case as defined applied only to those who held the bonds continually since it began.
If it had stood, Griesa's decision could have widened Argentina's liability in cases involving the seven percent of bonds not included in two debt restructuring deals after the country's 2001 default.
After years of litigation, in 2012 two New York hedge funds which refused to take part in the restructurings won court backing to claim full payment on the bonds they hold, worth about $1.6 billion today.
The Griesa decision in the eurobonds case could have added billions of dollars to the country's potential bill based on the hedge fund case.
Buenos Aires refuses to pay the hedge funds, arguing that would not be fair to those who joined the restructurings, accepting lower repayments on the debt.